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IOC purchases crude oil from Russia at a discounted rate of $20-$25: Report

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According to sources, Indian Oil Corporation (IOC) has bought as much as 3 million barrels of crude oil from Russia that had been offered at a steep discount to prevailing international rates.

The purchase, made through a trader, is the first

Ever since Russia’s February 24 invasion of Ukraine that brought international pressure for isolating the Russian President Vladimir Putin’s administration, the purchase that happened through a trader is the first such transaction.

With the US and other western nations slapping sanctions on Moscow, Russia has begun offering oil and other commodities at discounted prices to India and other large importers.

IOC, according to sources, bought Urals crude for May delivery at a discount of $20-25 a barrel to dated Brent. The transaction involved modified terms that require the seller to deliver it to the Indian coast to avoid any complications that sanctions may lead to in arranging shipping and insurance.

Oil and energy trade with Russia has not been banned, unlike the sanctions the US imposed on Iran over its controversial nuclear programme. This means international payment systems are available to settle any purchase made from Russia, it is said. In the case of Iran, the country was cut off from the international money and security transfer system, SWIFT and companies or entities investing or buying oil from Iran were also sanctioned.

On Monday, Oil Minister Hardeep Singh Puri told Rajya Sabha that the country would evaluate the Russian offer to sell crude oil at discounted prices after considering aspects such as insurance and freight required to move the fuel from the non-traditional supplier.

“Let me again reiterate that in a situation like the one characterised by the pandemic in the last two years and the last few weeks by a war or a military action taking place between Russia and Ukraine, the government will explore all options which are available,” he had said.

The minister said he had had discussions with the Russian government officials.

“Discussions are currently underway. Several issues are required to be gone into, like how much oil is available either in Russia or in new markets or with new suppliers that may be coming into the market. Also, there are issues relating to insurance, freight and a host of other issues, including the payment arrangements,” he had stated.

India buys just 1.3 per cent of all its oil needs from Russia, the second largest exporter of crude oil worldwide. Its decision to take up discounted Russian oil will not violate any of the US sanctions on Moscow, the White House has said.

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